stillkicking
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Just got back in the game after sitting things out since early May. Found a few new things to talk to about and will be posting soon.
Happy Thanksgiving to all
Happy Thanksgiving to all
Stillkicking's Rules for Day Trading
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stillkicking
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If you haven't learned by now, trading low cost or penny stocks (those between $1 and $5) is fraught with fraud, scams and just plain funny business. The majority of these companies have less than stellar track records in either the way they conduct business or the products or services they purport to offer. Therefore, buying into them is buying into what is basically a scheme, in most cases.
In order for us, as day traders of these gems, to come out ahead of the game and hopefully make some money we need an edge. Something that can give us more than just a shot in the dark of picking out one stock on any given day that might possibly be a runner. The holy grail for any day trader.
Something I'm now beginning to use, and suggest others take a look at, is combining reverse splits with news.
Investopedia defines, in part, a reverse split as:
A reverse stock split is a type of corporate action which consolidates the number of existing shares of stock into fewer, proportionally more valuable, shares. The process involves a company reducing the total number of its outstanding shares in the open market, and often signals a company in distress.
A company usually does this when their stock has dropped to less than $1.00 per share and they have been notified by the SEC to get it back above a dollar or get de-listed from the exchange.
The procedure is to take a penny stock that has had a recent reverse spit and place that stock into a financial news aggregator. Then, when that company follows their reverse split by releasing some news to try and further pump up their stock price, we have some advance notice and can move it to our watch screen for that day. In many cases, these stocks will become runners... if even for one morning. If we can catch that upward move early enough, we can make some money.
Source for stock splits: Stock Splits
Financial news aggregator: CityFalcon
In order for us, as day traders of these gems, to come out ahead of the game and hopefully make some money we need an edge. Something that can give us more than just a shot in the dark of picking out one stock on any given day that might possibly be a runner. The holy grail for any day trader.
Something I'm now beginning to use, and suggest others take a look at, is combining reverse splits with news.
Investopedia defines, in part, a reverse split as:
A reverse stock split is a type of corporate action which consolidates the number of existing shares of stock into fewer, proportionally more valuable, shares. The process involves a company reducing the total number of its outstanding shares in the open market, and often signals a company in distress.
A company usually does this when their stock has dropped to less than $1.00 per share and they have been notified by the SEC to get it back above a dollar or get de-listed from the exchange.
The procedure is to take a penny stock that has had a recent reverse spit and place that stock into a financial news aggregator. Then, when that company follows their reverse split by releasing some news to try and further pump up their stock price, we have some advance notice and can move it to our watch screen for that day. In many cases, these stocks will become runners... if even for one morning. If we can catch that upward move early enough, we can make some money.
Source for stock splits: Stock Splits
Financial news aggregator: CityFalcon
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stillkicking
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The Power of the Daily Chart
As a trader, I find it useful to get in the habit of running every potential day trade through the daily chart setting to get some idea of where the stock has been in the last, say, six months. While some may argue this will not do much for a day trade it may protect your pocketbook should the trade go against you (trading long) and you do not get out in time.
Here's what I mean. This is a one day chart of a stock called CPST. They're in the generator manufacturing business, for those who even care. To look at this one day chart it's near impossible to make a clear decision on whether or not this stock is even worth following. I, for one, would not be much interested in this stock, based on this chart.
Now take a look at CPST, over the last six months, on a daily chart. The company's stock price picture gets much clearer. Their stock has been on a downward trend until recently. They've had over two weeks of relatively strong days towards the upside and, perhaps, that trend will continue in the near future.
Bottom line, here, is to run your picks through a daily chart so you do not get blindsided by the occasional pop in stock price. Especially if you plan on holding the stock as a swing trade over several days ...or... you get stuck doing so as I sometimes do
.
Full Disclosure: I do not own CPST not do I plan on doing so in the near future. I am using it only as an example for this post.
As a trader, I find it useful to get in the habit of running every potential day trade through the daily chart setting to get some idea of where the stock has been in the last, say, six months. While some may argue this will not do much for a day trade it may protect your pocketbook should the trade go against you (trading long) and you do not get out in time.
Here's what I mean. This is a one day chart of a stock called CPST. They're in the generator manufacturing business, for those who even care. To look at this one day chart it's near impossible to make a clear decision on whether or not this stock is even worth following. I, for one, would not be much interested in this stock, based on this chart.
Now take a look at CPST, over the last six months, on a daily chart. The company's stock price picture gets much clearer. Their stock has been on a downward trend until recently. They've had over two weeks of relatively strong days towards the upside and, perhaps, that trend will continue in the near future.
Bottom line, here, is to run your picks through a daily chart so you do not get blindsided by the occasional pop in stock price. Especially if you plan on holding the stock as a swing trade over several days ...or... you get stuck doing so as I sometimes do
.Full Disclosure: I do not own CPST not do I plan on doing so in the near future. I am using it only as an example for this post.
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stillkicking
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Get in and get out
As I examine my most recent day trades, along with the earlier ones made back in the beginning of the year and end of 2018, one thing clearly stands out. The longer I'm in the trade the less of a chance I have of turning a decent profit.
My most lucrative trades were made in less than an hour and, in most cases, in less than 15 minutes. The longer I stayed in, the less of a return I made and, in many cases, it want against me and I took a loss.
One trader I follow claims he is only in a trade for 20 minutes from 9:50 to 10:10. I'm not sure I can emulate him with the stocks I trade but I tend to agree the best money is made before 11:00AM.
Yes, I've seen the push from 11:30 to noon and yes I have seen stocks rally late in the day. But, I have also seen them tank more often than moving much higher than they were in the morning.
Would be interested in hearing from others on this.
As I examine my most recent day trades, along with the earlier ones made back in the beginning of the year and end of 2018, one thing clearly stands out. The longer I'm in the trade the less of a chance I have of turning a decent profit.
My most lucrative trades were made in less than an hour and, in most cases, in less than 15 minutes. The longer I stayed in, the less of a return I made and, in many cases, it want against me and I took a loss.
One trader I follow claims he is only in a trade for 20 minutes from 9:50 to 10:10. I'm not sure I can emulate him with the stocks I trade but I tend to agree the best money is made before 11:00AM.
Yes, I've seen the push from 11:30 to noon and yes I have seen stocks rally late in the day. But, I have also seen them tank more often than moving much higher than they were in the morning.
Would be interested in hearing from others on this.
stillkicking
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I've updated my "penny stock" day trading checklist.
If I follow it to the letter... I can do alright. When I don't, I will usually get into trouble.
If I follow it to the letter... I can do alright. When I don't, I will usually get into trouble.
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stillkicking
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Going long... with my monitor, that is.
I use Think-or-Swim for my trading platform.
I make the trades on one 16x9 screen, run by it's own computer, and I set up the stocks I'm watching on another, older, 19" 3x4 screen, powered by its' own computer.
Until now, I had four stocks on this screen but I find now I can easily keep an eye on more. When I tried adding six stocks the TOS software would combine the volume bars mixed in with the candles and it was unreadable.
The poorman's solution was to flip this monitor on it's side and set the screen to run in the portrait mode. This gave me my six stocks with the volume bars running separately at the bottom, as before.
No more clutter!
I use Think-or-Swim for my trading platform.
I make the trades on one 16x9 screen, run by it's own computer, and I set up the stocks I'm watching on another, older, 19" 3x4 screen, powered by its' own computer.
Until now, I had four stocks on this screen but I find now I can easily keep an eye on more. When I tried adding six stocks the TOS software would combine the volume bars mixed in with the candles and it was unreadable.
The poorman's solution was to flip this monitor on it's side and set the screen to run in the portrait mode. This gave me my six stocks with the volume bars running separately at the bottom, as before.
No more clutter!
stillkicking
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The pop that refreshes
Some days, I think I'm smarter than the market and rather than take a quick profit after initiating a penny stock buy I hold out for more $$. That often comes back to bite me on the butt. I end up sitting on my shares way too long and, having pulled my stop, watch the price drop.
Luckily, there can be a sliver lining in all this and it's what I call the pop that refreshes. I will cancel my sell order after the market closes and place a new one set for GTC_EXT, good till cancelled extended. This has my sell order working after hours between 4:00PM and 9:30AM. If the planets are aligned in my favor I will often times get filled and be done with that nasty little stock.
Important to note that my fill usually will be at a price not seen again for that stock during the following trading day. What happens is the stock price will pop up just for a split second and take me out. If someone wants this stock badly enough and my shares are the only ones left to buy (remember it's after hours now and things are slow) they will end up buying them.
As is often the case with penny stocks trading on a weak catalyst, they become one hit wonders. Up one day and back down the next. If you still own them at the closing bell you may own them forever. Try this next time and you may be surprised.
Some days, I think I'm smarter than the market and rather than take a quick profit after initiating a penny stock buy I hold out for more $$. That often comes back to bite me on the butt. I end up sitting on my shares way too long and, having pulled my stop, watch the price drop.
Luckily, there can be a sliver lining in all this and it's what I call the pop that refreshes. I will cancel my sell order after the market closes and place a new one set for GTC_EXT, good till cancelled extended. This has my sell order working after hours between 4:00PM and 9:30AM. If the planets are aligned in my favor I will often times get filled and be done with that nasty little stock.
Important to note that my fill usually will be at a price not seen again for that stock during the following trading day. What happens is the stock price will pop up just for a split second and take me out. If someone wants this stock badly enough and my shares are the only ones left to buy (remember it's after hours now and things are slow) they will end up buying them.
As is often the case with penny stocks trading on a weak catalyst, they become one hit wonders. Up one day and back down the next. If you still own them at the closing bell you may own them forever. Try this next time and you may be surprised.
